“AMA’s Approach to Impairment Rating Evaluations is Unconstitutional”—an article written by Samuel H. Pond and Andrew F. Ruder of Pond Lehocky Stern Giordano, published in The Legal Intelligencer on April 23, 2013. The title speaks for itself, but contained therein was an explanation that while the Pennsylvania Workers’ Compensation Act (act) does not place limitations on the length of time an injured worker can receive ongoing wage loss benefits, it did establish an impairment rating system for individuals who had been receiving total disability benefits for a period of two years.
Specifically, Section 306(a.2)(1) of the act provided that when a claimant received total disability benefits for a period of 104 weeks, they were required, if requested by the employer, to submit to an Independent Rating Evaluation (IRE). If the claimant’s impairment rating was less than 50 percent, his/her benefit status would be reduced from total to partial disability, capping wage loss benefits to 500 weeks. In making these impairment rating determinations, the act required physicians to follow the most recent guidelines as developed by the American Medical Association (AMA). In the aforementioned April 2013 article, the authors argued that since the AMA is a private organization with absolutely no connection to the Pennsylvania Legislature, the use of its guidelines was an impermissible delegation of the legislature’s exclusive law-making power under the Pennsylvania Constitution.
Fast-forward to June 20, 2017—the Supreme Court of Pennsylvania handed down its definitive opinion in Protz v. Workers’ Compensation Appeal Board (Derry Area School District), 124 A.3d 406 (Pa. 2017), finding Section 306(a.2) of the act to be an unconstitutional delegation of legislative authority by the General Assembly to the AMA, striking the section in its entirety. This declaration of unconstitutionality in an area of law as rule-bound and fact-specific as workers’ compensation has unfortunately left the playing field in considerable disarray as it relates to the retroactive application of the elimination of this standard.
Accordingly, this article offers: an explanation regarding how the first level of appellate review is currently handling retroactive application of Protz for cases where the injured worker has challenged his/her status during their 500 weeks; a prediction as to how this appellate body will handle cases in which a challenge is made after 500 weeks; and an opinion as to how the appellate courts should address the retroactive application of Protz moving forward.
Injured Workers Who Did Not Raise the Constitutional Issue During Litigation are Entitled to Reinstatement to Total Disability as of June 20, 2017.
The first level of appellate review in workers’ compensation matters is the Workers’ Compensation Appeal Board (WCAB). In reviewing WCAB decisions post-dating June 20, 2017, specifically Thomas v. City of Philadelphia, A16-1176, Bureau No. 3907279, (Dec. 19, 2017), it becomes readily apparent the WCAB has determined the Supreme Court’s holding in Protz has differing impacts depending on the procedural posture of each case. The first class of individuals are those that contest the conversion within the original 60-day appeal period, or oppose the granting of a modification through the appeal process, raising the unconstitutionality argument. There is absolutely no question that these injured workers do not require retroactive review and their benefit status is changed back to total disability retroactive to the original effective date of the status change (i.e., restoration of his entire 500 weeks of partial disability as though the previous change to partial disability status never occurred).
The second category are claimants who did not timely challenge their status conversion, but did file a petition within 500 weeks seeking to reinstate their total disability status, arguing that the IRE provisions of the act were unconstitutional. The WCAB has held that these individuals have a right to reinstatement to total disability status as of June 20, 2017, (the date of the Supreme Court decision in Protz). Thus, any weeks of partial disability expended prior to June 20, 2017, are deemed expired.
According to the WCAB, in Thomas and other similar cases, despite the unconstitutionality of the IRE provisions that have been stricken from the act, any claimant who did not timely challenge the conversion on constitutional grounds, waived any constitutional question and accepted the conversion and its legality under the law that was in effect at the time. It is clear that claimants who did not raise the constitutionality argument during litigation are still entitled to reinstatement to total disability; however, only as of June 20, 2017. Accordingly, if an injured worker had exhausted 300 weeks of partial benefits as of June 20 last year, then they have been restored to total benefits, but they only have 200 weeks of partial benefits remaining should they reach that status again.
The WCAB Will Not Permit the Reinstatement of Benefits for Petitions Filed Outside of the 500 Week-Period.
The WCAB decisions in cases where claimants did not timely challenge their status conversion, but filed a petition within 500 weeks seeking to reinstate their total disability status, is instructive as to how this appellate body will handle the issue of petitions filed outside the 500 week-period. This is the third class of individuals seeking retroactive application. Specifically, these decisions strongly imply the WCAB will not reinstate benefits to claimants who file petitions beyond 500 weeks.
The WCAB, in explaining that the holding in Protz did not undo the numerous status conversions pursuant to an IRE that could have been, but were not, challenged in a timely manner, noted that unless contested on direct appeal, unchallenged transactions whereby a claimant’s benefit status was changed from total to partial should be considered final. Moreover, the WCAB has determined claimants are entitled to relief so long as their Petition was filed within 500 weeks after the disability status was changed, pointing out that it is no longer possible to obtain a new IRE showing impairment of 50 percent or more. Thus, in considering the WCAB’s reasoning, it is evident that a claimant who did not timely challenge the conversion on constitutional grounds, will be deemed to have waived any constitutional question and accepted the conversion and its legality under the law in effect at the time. Accordingly, the WCAB will not likely entertain cases in which a claimant is seeking reinstatement, but filed the Petition outside the 500-week period.
Commentary on Universal Retroactive Application of Protz.
The Supreme Court’s decision in Protz struck the entire mechanism of IREs, and modification based on IREs, from the commonwealth’s statutory framework. The purpose therein was to erase a legal structure that caused injustice to injured workers across the commonwealth by removing a system that “gave the AMA de facto, unfettered control over a formula that ultimately will determine whether a claimant’s partial-disability benefits will cease after 500 weeks.”
While retroactive application of a new rule of law is a matter of judicial discretion usually exercised on a case-by-case basis, the general rule is that a decision announcing a new substantive rule of law is applied retroactively so that a party whose case is pending is entitled to the benefit of changes in the law as in Kituskie v. Corbman, 552 Pa. 275, 283 n.5, 714 A.2d 1027, 1030 (1998), (citing Blackwell v. State Ethics Commission, 527 Pa. 172, 184, 589 A.2d 1094, 1100 (1991)).
In August 2017, the Commonwealth Court handed down Thompson v. Workers’ Compensation Appeal Board (Exelon Corp.), 168 A.3d 408 (Pa. Cmwlth. 2017), which clearly applies Protz retroactively, if not expressly:
The Supreme Court concluded that as a result of the unconstitutional delegation, the entirety of Section 306(a.2) of the act must be stricken as unconstitutional. In so doing, the Supreme Court essentially struck the entire IRE process from the act. Under the Supreme Court’s recent decision in Protz II, Section 306(a.2) is stricken and no other provision of the act allows for modification of benefits based on an IRE. Accordingly, the board’s opinion and order is reversed to the extent that it modified claimant’s workers’ compensation benefits from full to partial.
Moreover, Thompson, where the injury occurred in 1998, addressed a procedural posture wherein the claimant’s 500 weeks of already-modified partial disability status had effectively elapsed. There, the Commonwealth Court laid out the precise posture of the case, but did not even address the particulars, concluding that in light of Protz, “the entire IRE process stricken from the act” and “no other provision of the act allows for modification of benefits based on an IRE.” The decision in Thompson signals the courts’ directive that all modifications based on IREs now have no legal foundation.
As illustrated above, and stated in Commissioner Wilderman’s dissent in Thomas v. City of Philadelphia, by only reinstating an injured worker’s benefits as of June 20, 2017, the WCAB “continues to subject claimants to the legacy of the now void IRE provisions of the act” by having them de facto retain the weeks of partial disability status. This, however, could potentially lead to a claimant’s benefits being completely cut off if he/she ever would be placed back into partial disability status via other wage loss modification vehicles, such as a future labor market survey or funded employment. If we are to apply the Protz decision to all claimants that filed review/reinstatement petitions within their 500-week periods, it must be fully applied and relate back to the original initiating event that placed claimants in the IRE system, the IRE itself.
As of June 20, 2017, these modifications no longer rest on any legal foundation since the provision that enabled it has been stricken entirely as unconstitutional. To continue considering the IRE process would be a miscarriage of justice in contravention of the humanitarian goals of the act. In accordance with the Supreme Court’s decision in Protz, the whole IRE process and any consideration thereof should be set to rest. Hence, all three classes of individuals discussed herein, seeking challenge to their disability status via the Protz decision, should be treated the same. They all must be placed back on total disability status with preservation of their 500 weeks of partial disability benefits intact.
Partner David F. Stern and Associate Taylor J. Cohen are workers’ compensation attorneys at Pond Lehocky Stern Giordano. Contact them at email@example.com and firstname.lastname@example.org.